Critical Review: Finward Bancorp (OTCMKTS:FNWD) versus Provident Financial (NASDAQ:PROV)

Finward Bancorp (OTCMKTS:FNWDGet Rating) and Provident Financial (NASDAQ:PROVGet Rating) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, institutional ownership and earnings.

Institutional and Insider Ownership

11.7% of Finward Bancorp shares are owned by institutional investors. Comparatively, 60.2% of Provident Financial shares are owned by institutional investors. 15.3% of Finward Bancorp shares are owned by company insiders. Comparatively, 14.0% of Provident Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Finward Bancorp and Provident Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Finward Bancorp 18.42% 8.75% 0.79%
Provident Financial 25.79% 7.80% 0.84%

Valuation & Earnings

This table compares Finward Bancorp and Provident Financial’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Finward Bancorp $66.60 million 2.43 $14.96 million $3.55 10.62
Provident Financial $39.77 million 2.69 $7.56 million $1.32 11.11

Finward Bancorp has higher revenue and earnings than Provident Financial. Finward Bancorp is trading at a lower price-to-earnings ratio than Provident Financial, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Finward Bancorp has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500. Comparatively, Provident Financial has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500.

Dividends

Finward Bancorp pays an annual dividend of $1.24 per share and has a dividend yield of 3.3%. Provident Financial pays an annual dividend of $0.56 per share and has a dividend yield of 3.8%. Finward Bancorp pays out 34.9% of its earnings in the form of a dividend. Provident Financial pays out 42.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Finward Bancorp and Provident Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Finward Bancorp 0 0 1 0 3.00
Provident Financial 0 0 0 0 N/A

Finward Bancorp presently has a consensus price target of $56.00, suggesting a potential upside of 48.54%. Given Finward Bancorp’s higher possible upside, analysts plainly believe Finward Bancorp is more favorable than Provident Financial.

Summary

Finward Bancorp beats Provident Financial on 8 of the 15 factors compared between the two stocks.

Finward Bancorp Company Profile (Get Rating)

Finward Bancorp operates as the holding company for Peoples Bank that provides various banking products and services. The company's deposit products include non-interest and interest bearing demand accounts, savings accounts, money market deposit accounts, certificate accounts, and retirement savings plans. Its loan products portfolio comprises residential mortgage loans that enable borrowers to purchase existing homes, refinance existing homes, or construct new homes; construction loans primarily to individuals and contractors; commercial real estate loans; consumer loans to individuals for personal, household, or family purposes; home equity line of credit; home improvement loans and equity loans; commercial business loans; government loans; and loans to municipalities. The company also offers estate and retirement planning services, guardianships, land trusts, profit sharing and 401(k) retirement plans, IRA and Keogh accounts, and investment agency accounts, as well as serves as the personal representative of estates, and acts as trustee for revocable and irrevocable trusts. In addition, it provides insurance and annuity investments to wealth management customers; holds real estate properties; and operates as a real estate investment trust. As of March 2, 2022, the company operated through 30 locations in Lake and Porter counties in Northwest Indiana and South Chicagoland. The company was formerly known as NorthWest Indiana Bancorp and changed its name to Finward Bancorp in May 2021. Finward Bancorp was incorporated in 1994 and is headquartered in Munster, Indiana.

Provident Financial Company Profile (Get Rating)

Provident Financial Holdings, Inc. operates as the holding company for Provident Savings Bank, F.S.B. that provides community banking services to consumers and small to mid-sized businesses in the Inland Empire region of Southern California. Its deposit products include checking, savings, and money market accounts, as well as time deposits; and loan portfolio consists of single-family, multi-family, commercial real estate, construction, mortgage, commercial business, and consumer loans. The company also offers investment services comprising the sale of investment products, such as annuities and mutual funds; and trustee services for real estate transactions. It operates through 12 full-service banking offices in Riverside County and one full-service banking office in San Bernardino County. The company was founded in 1956 and is based in Riverside, California.

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